Aug. 3, 2023
All of my prior submitted comments have been mysteriously deleted, but I’ll give this one last shot due to the importance of this rule. The proposed SEC rule requiring public reporting of large security-based swap positions is a necessary and beneficial measure to protect the integrity and stability of the financial markets. Security-based swaps are complex and opaque instruments that can be used to hide large naked short positions and to engage in other types of market manipulation. By requiring public disclosure of security-based swap positions, the proposed rule would enhance transparency, accountability and oversight of these transactions, and deter fraud, deception and market manipulation. SBS play an important part in the current market structure that has rendered outstanding shares a meaningless number, where speculative naked short selling by participants failing to adhere to bona fide market making requirements has been accepted due to its supposed benefit to “liquidity”, which is really just a major distortion of supply and demand dynamics that makes accurate price discovery impossible and benefits the largest market participants committing some of the most egregious conduct. The rule would enable regulators, investors and other stakeholders to monitor and analyze the potential impact of security-based swap positions on the underlying securities and the financial markets. It would be a strong deterrent against fraudulent, deceptive or manipulative conduct in connection with security-based swaps by increasing the likelihood of detection and enforcement. It would promote market integrity and confidence by reducing information asymmetry and enhancing accountability. For all of the above reasons, I urge the Commission to promulgate the proposed SEC rule as a vital step to protect the public interest and foster a fair, orderly and efficient market. I further urge the Commission to make the rule immediately effective, both due to the pressing need to protect investors and the growing sentiment that the SEC is not fulfilling their mandate and instead acting to protect bad actors.